45th legislature - STATE OF NEW MEXICO - first session, 2001

RELATING TO ELECTRICITY; PROVIDING FOR RENEWABLE ENERGY TAX CREDITS AGAINST PERSONAL INCOME TAX; MAKING AN APPROPRIATION.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. [NEW MATERIAL] FINDINGS AND PURPOSE.--The legislature finds that the rapid increase in costs of fuel and the proposed restructuring of the electric industry are creating increasing uncertainty about the long-range prospects for a stable supply of electricity at reasonable cost to the residents and businesses in New Mexico. The state is blessed with an abundance of technological expertise and natural resources that can be used to help develop alternative sources of electricity using low- or zero-emission technologies. Developing those resources can also generate new employment and business opportunities for the residents of the state and help New Mexico lead the nation in applying new technologies to produce electricity using renewable energy sources. Electricity produced using wind energy and fuel cells is becoming commercially viable on a large scale. Providing incentives to private industry to invest in and produce electricity with renewable energy sources will promote greater use of low- and zero-emission technologies and less reliance on non-renewable energy sources for electricity production and, for residents of areas of the state with high wind energy potential, create new sources of jobs and income. Promoting these technologies now will help ensure that electric consumers in New Mexico will have a stable supply of surplus energy available at reasonable rates in the future.

Section 2. A new section of the Income Tax Act is enacted to read:

"[NEW MATERIAL] INCOME TAX--RENEWABLE ENERGY INVESTMENT CREDITS--DEFINITIONS.--

A. A taxpayer that is a small energy producer and owns a qualified energy generator, and that files a New Mexico personal income tax return may claim a renewable energy investment credit against personal income tax in an amount up to fifty thousand dollars ($50,000), equal to twenty percent of the cost of productive capital used exclusively for generation of electricity using a qualified energy resource.

B. To qualify for the credit pursuant to Subsection A of this section, the productive capital must be placed in service in New Mexico during the taxable year for which the credit is claimed, the credit must be claimed within a year of the productive capital being placed in service and the taxpayer must submit a tax credit claim from the public regulation commission qualifying the taxpayer for the credit.

C. The credit may be deducted from the taxpayer's personal income tax liability; provided that if the credit exceeds the tax liability for the taxable year in which the productive capital was placed in service, the taxpayer may carry forward the credit for up to a total of five taxable years. A taxpayer may claim the credit for each taxable year in which productive capital is placed in service; provided that the maximum aggregate credit allowable for a qualified energy generator for any taxable year shall not exceed fifty thousand dollars ($50,000).

D. A husband and wife who file separate returns for a taxable year in which they could have filed a joint return may each claim only one-half of the credit that would have been allowed them on a joint return.

E. A taxpayer who otherwise qualifies and claims a credit on a qualified energy generator owned by a partnership or other business association of which the taxpayer is a member may claim a credit only in proportion to his interest in the partnership or association.

F. As used in this section:

(1) "productive capital" means tangible personal property that is depreciable, has a useful life of at least three years and is used exclusively as an integral part of the equipment used to generate electricity using a qualified energy resource;

(2) "qualified energy generator" means a facility located in New Mexico that is put into production after July 1, 2001, that produces electricity using a qualified energy resource;

(3) "qualified energy resource" means electrical energy generated by means of a low- or zero-emissions generation technology that has substantial long-term production potential and for the purposes of this section includes only generation technology using any of the following energy sources: solar light; solar heat; wind; geothermal; landfill gas; anaerobically digested waste biomass; and fuel cells; and

(4) "small energy producer" means a person that does not own electric generating facilities or owns facilities that have a net production capacity of less than ten megawatts."

Section 3. A new section of the Income Tax Act is enacted to read:

"[NEW MATERIAL] PERSONAL INCOME TAX--RENEWABLE ENERGY PRODUCTION CREDIT--DEFINITIONS.--

A. A taxpayer that owns a qualified energy generator using a qualified energy resource is eligible for a renewable energy production credit in an amount equal to one and one-half cent ($.015) per kilowatt hour for the electricity so produced. The production credit may be deducted annually from the taxpayer's personal income tax liability.

B. The production credit is available to a qualified energy generator that begins producing electricity after July 1, 2001. A qualified energy generator is eligible for a production credit for ten consecutive years, beginning on the date the qualified generator begins producing electricity. The taxpayer must submit a tax credit claim issued by the public regulation commission qualifying the taxpayer for the credit.

C. A husband and wife who file separate returns for a taxable year in which they could have filed a joint return may each claim only one-half of the credit that would have been allowed them on a joint return.

D. A taxpayer who otherwise qualifies and claims a credit on a qualified energy generator owned by a partnership or other business association of which the taxpayer is a member may claim a credit only in proportion to his interest in the partnership or association.

E. As used in this section:

(1) "qualified energy generator" means a facility located in New Mexico that produces electricity using a qualified energy resource and that sells that electricity to an unrelated person; and

(2) "qualified energy resource" means electrical energy generated by means of a low- or zero-emissions generation technology that has substantial long-term production potential and for the purposes of this section includes only generation technology using any of the following energy sources: solar light; solar heat; wind; geothermal; landfill gas; anaerobically digested waste biomass; and fuel cells."

Section 4. [NEW MATERIAL] VERIFICATION OF RENEWABLE ENERGY CREDIT--PUBLIC REGULATION COMMISSION RULES--TAX CREDIT CLAIM FORM--ANNUAL LIMIT.--

A. A taxpayer may apply for verification of eligibility for a renewable energy investment tax credit or production tax credit with the public regulation commission, which shall determine if the applicant is a qualified energy generator using a qualified energy resource. The commission shall issue a tax credit claim to the taxpayer if the taxpayer qualifies for the credit and the taxpayer has applied before the annual limit on tax credit claims is reached.

B. The public regulation commission shall limit the total amount of tax credit claims approved and issued annually to no more than eight million dollars ($8,000,000) on a first-come, first-served basis. Once a taxpayer has been granted a production tax credit for a given facility, that taxpayer shall be allowed to keep its original date of application for that credit for that facility until either the facility goes out of production for more than six months in a year or until the facility's ten-year eligibility has expired.

C. The public regulation commission shall provide tax credit claim forms. A tax credit claim shall accompany any return to which the taxpayer wishes to apply an approved credit, and the claim shall specify the amount of credit intended to apply to each return.

D. The public regulation commission shall adopt and promulgate rules necessary to carry out the provisions of this section and shall report annually to the legislature on the costs of administering the provisions of this section.

Section 5. APPROPRIATION.--One hundred thousand dollars ($100,000) is appropriated from the general fund to the public regulation commission for expenditure in fiscal year 2002 to fund one full-time-equivalent position and to carry out the provisions of Section 4 of this act. Any unexpended or unencumbered balance remaining at the end of fiscal year 2002 shall revert to the general fund.

Section 6. APPLICABILITY.--The provisions of this act apply to taxable years beginning on or after January 1, 2001.

Section 7. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2001.